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Smithfield says fresh pork prices jumped 12%

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Company faces tariffs on exports to China

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US hog herd fell 1% as of September 1 from year ago

(Adds details throughout on sales prices and comments from CEO)

By Tom Polansek and Savyata Mishra

Oct 28 (Reuters) - Smithfield Foods ( SFD ), the biggest

U.S. pork processor, reported increased quarterly revenue and

profits on Tuesday as sales prices climbed.

The company, a majority-owned subsidiary of Hong Kong-based

WH Group ( WHGRF ), raised the midpoint of its annual profit

forecast range, sending its shares up 2.7% in early trading.

Smithfield said average sales prices for its packaged meat,

including bacon, sausage and hot dogs, climbed 9.2%, while

prices for its fresh pork products jumped 12% due to lower U.S.

production and strong demand from consumers. Sales volumes were

steady, according to the company.

The company, which owns some hogs and buys others to

process, has seen higher hog prices, CEO Shane Smith told

analysts on a conference call.

TOTAL SALES UP 12.4%

The U.S. hog herd was 1% smaller at the start of September,

compared with a year earlier, according to U.S. government data.

"The increase in average sales price was primarily due to

higher raw material costs," Smithfield said in a regulatory

filing.

Smithfield's total sales increased 12.4% to $3.75 billion in

the quarter ended September 28, compared with a year earlier. It

earned quarterly profit of 58 cents per share on an adjusted

basis from continuing operations, compared with 53 cents a year

earlier.

The meatpacker raised its outlook for annual adjusted

operating profit between $1.23 billion and $1.33 billion,

compared with its prior forecast of $1.15 billion to $1.35

billion.

OPERATING PROFIT DOWN 5.7%

Smithfield has sought to rein in expenses amid rising raw

material costs and cautious consumer spending. It closed a U.S.

sausage plant and eliminated jobs this year.

Operating profit in its largest packaged meats segment fell

5.7% in the quarter, while profits in the fresh pork division

dropped about 64%.

Reduced U.S. exports of certain byproducts to China limited

gains in Smithfield's average sales prices for fresh pork,

according to the company.

Most products that Smithfield ships to China, the world's

biggest pork consumer, were subject to 57% tariff rates in the

quarter, according to the company.

"Fresh pork has been navigating a challenging tariff

environment," Smith said.

Investors expect U.S. President Donald Trump to reach a deal

with Chinese President Xi Jinping on Thursday to cool their

trade conflict.

Smithfield previously said it does not export material

amounts of meat to China, but ships offal products, such as pig

stomachs, hearts and heads, which U.S. consumers generally do

not buy.